Who is considered the Owner of Money and Gifts given to Young Children?

Question:

I wanted to know who is considered the owner of the money and gifts given by family and friends to young children. Does it belong to the children or their parents?

Secondly, what is the status of the money set aside by parents for their children? Can the parents use that money, or does it belong solely to the children and can only be used on them?

Answer:

In the name of Allah, Most Compassionate, Most Merciful,

1) In terms of money and/or items gifted to children by others such as family and friends, the Islamic ruling will depend on the intention of those who gave the gift:

a) If the intention was to gift money and/or items to the parents so that they may spend on their child, then such items and money will be the property of the parents. Government benefits such as Child Benefit and Child Tax Credit are paid to the parent deemed to have care of the child [usually the mother], thus these benefits received will also be the property of the parent.

As such, it is best to seek clarification from those gifting the money and/or items. If this is not possible, then apparent signs can indicate whether the recipient is the child or parents. If items such as toys and child clothes are given to the father, for example, then this would indicate that the recipient is the child. If, however, money and other items are given; then if they are given by family and friends of the father, it would indicate that the recipient is the father, and if given by family and friends of the mother, it would indicate that the recipient is the mother. Furthermore, the giver saying “this is for the child” does not necessarily make the child the owner; since the intention could be to gift the money to the parents, to allow them to spend on the child. (Takmila Al-Bahr al-Ra’iq)

In this case, where the gift is to the parents, it is recommended to spend the money on the child. However, it is permitted to use it for personal needs too.

b) If the intention was to gift the money and/or items to the child, then such items will be the property of the child. If an amount was given jointly to multiple children, they will become owners in equal shares.

The general ruling regarding gifts is that a gift is not considered as ‘complete’ until the recipient takes possession (qabd) of the gifted item. This is the position of the vast majority of Companions such as Abu Bakr, Umar, Uthman and Ali (Allah be pleased with them) and major classical Imams. (See: Al-Mughni of Ibn Qudama)

However, in regards to young children the possession of their legal guardian (wali), such as the father or grandfather, and mother – if the child is in her custody – acts as a substitute for the child’s possession. (Kashf al-Haqa’iq sharh Kanz al-Daqa’iq 2/147 and Al-Bahr al-Ra’iq)

In this case, where the gift is to the child, it is not permitted to use the money and gifted items for other purposes. The parents may, however, take into consideration the child’s contribution towards food and house bills.

2) In terms of money and/or items gifted to the children by parents themselves, this again will depend on the underlying intention:

a) If the parents merely put the money aside to be used for the child as and when needed, the money will remain in their ownership. In this case, it is perfectly permitted to use the money and/or item for other purposes.

b) However, if the intention was to actually ‘gift’ the money and/or items to the child, then such items will be the property of the child – even if it remains in the possession of the parent. The possession of the parent acts as a substitute for the possession of the pubescent (non-baligh) child, as stated previously.

As such, if a parent makes the intention that the money is being given as a gift to the child, and he makes this known, then the gift is considered as complete. (Radd al-Muhtar 8/499, Al-Fatawa al-Hindiyya 4/392, Kashf al-Haqa’iq 2/147 and other fiqh references)

In this case, too, the money and gifted items should only be used in the interests of the child.

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